Turkcell Stake Coveted as Fridman Awaits Payment: Turkey Credit

Companies doing business in Turkey received $4.8 billion of loans last month, up from $227 million in January and compared with $2.6 billion in April 2013, data compiled by Bloomberg show. Photographer: Kerem Uzel/Bloomberg

May 16 (Bloomberg) -- Turkish billionaire Mehmet Emin
Karamehmet is pushing ahead with plans to reclaim a stake in the
nation’s top mobile-phone company from Russia’s Mikhail Fridman,
tapping into a loan market showing signs of recovery.

Karamehmet is seeking about $1.6 billion in loans to get a
13.8 percent stake in Turkcell Iletisim Hizmetleri AS, said two
people with direct knowledge of the plan. Cukurova Holding AS
has until the end of June to repay as much as $1.59 billion to
billionaire Fridman’s Alfa Group, said the people, who asked not
to be identified because the matter is confidential.

While corporate loans in Turkey have fallen 26 percent this
year from the same period in 2013, to $9.2 billion, lending has
picked up month by month, data compiled by Bloomberg show.
Borrowing costs have been climbing in the past year for
countries with a high dependence on foreign capital, said
Apostolos Bantis, a credit analyst at Commerzbank AG.

“The timing is not the best as it will result in a higher
premium” for Cukurova, London-based Bantis said yesterday by e-mail. “Eventually Cukurova will manage to source the new
loan.”

Companies doing business in Turkey received $4.8 billion of
loans last month, up from $227 million in January and compared
with $2.6 billion in April 2013, data compiled by Bloomberg
show. The interest margin on dollar loans averaged 142 basis
points more than the benchmark in 2014, up 20 basis points from
the same period last year, the data show.

Loan Collateral

Cukurova plans to use the Turkcell stake as collateral for
the long-term loan, the people said. It may also use assets at
oil unit Genel Energy Plc, co-owned with former BP Plc Chief
Executive Officer Tony Hayward, one of the people said.

A Cukurova official, who asked not to be identified because
of company policy, declined to comment.

The lira strengthened 0.2 percent to 2.0952 per dollar at
5:50 p.m. in Istanbul. The currency has gained 7.5 percent since
the central bank unexpectedly raised interest rates in January
to stem losses spurred by a probe into government corruption,
and the scaling back of U.S. stimulus measures.

Turkcell has been at the center of a dispute between
Karamehmet, its founder, Fridman and Nordic operator TeliaSonera
AB. Alfa seized the Turkcell stake when it said Cukurova
defaulted on a 2005 loan agreement for which the shares were
pledged as collateral.

Finding Finances

Turkey’s Savings Insurance Fund also seized some Cukurova
assets including digital pay TV unit Digiturk and truckmaker BMC
Sanayi Ve Ticaret AS last year, and has since forced the sale of
some of them.

Istanbul-based Ciner Group bought Show TV and Aks
Televizyon for $402 million, while Turkish businessman Ethem
Sancak took over a newspaper and the Skyturk 360 TV station for
$62 million. Sancak’s ES Mali Yatirim & Danismanlik bought BMC
this month for 751 million liras ($357 million).

“We expect Cukurova to find finances to repay Alfa,” said
Tibor Bokor, head of telecommunications research at London-based
Wood & Co.